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Are fiscal cliff doomsayers overreacting?

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Billionaire investor Warren Buffett, long supportive of higher taxes for America's super-rich, told CNN this week that lawmakers could have as much as a couple of months next year to reach a deal.

"The fact they can't get along for the month of January is not going to torpedo the economy," he said.

Chief executives warn of the damaging effects of uncertainty on their investment and hiring decisions. Many investors have focused on the risk of a new recession if the cliff is not addressed. And tumbling stock prices can add to the sense of panic and hurt both business and consumer confidence.

The Congressional Budget Office estimates that the tax hikes and spending cuts would amount to $600 billion in 2013 and could cause the U.S. economy to contract by nearly 3 percent in the first half of the year.

But that does not mean the pain begins automatically at the start of January.

For example, there could be a long lag, possibly lasting several months, between Jan. 2, when the budgets of government agencies would be cut, and the actual implementation of those cuts to programs ranging from research grants to court room security.

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